[RFC] Better Utilization of Public Pools

Author: @Alustath
Related Discussions: N/A
Submission Date: 11/15/22

Simple Summary: to better utilize the currently available public pools model

Abstract and Motivation: a key factor of success of any DEX is liquidity and number of tokens available, we can better utilize the current model for public pools to make it more secure and provide higher liquidity with more tokens to trade.

Specification & Rationale: allow MMs to create more public pools with more tokens / liquidity with a security system for removal of liquidity based on multi-level approval by HFT’s admins, so that no MMs are not allowed to suddenly withdraw all liquidity and at the same time we will have much more coins/tokens to trade with high liquidity.

Benefits (Pros):
1- more tokens / high liquidity will push hashflow to the top ranks among other exchanges.
2- MMs will be able to profit though existing RFQ model by higher volumes / trades.
3- LP providers will be able to make profits through LP rewards. noting that rewards shall be paid within the same network / tokens of the pool that you provide LP for (preferably in real-time) to incentivize people to maintain/increase their LP.
4- as more people participate in LP provision, they will also use the exchange more and more instead of having to switch to other DEX/CEX.
5- could be a future source of income to DOA in case fees are introduced.

Downside (Cons): multi-level approval security system may result in extra load / manual work for HFT’s admins / team, but it is necessary to mitigate the risk.

Voting: a “yes” means that you agree to the above proposal and “no” means you don’t agree.

6 Likes

Yeah I agree with this - I see myself using other trading venues if I can’t find the token on Hashflow. Would be great to see more tokens added to the platform!

2 Likes

The main caveat to this approach is that market makers still use “signer” keys to approve trades on the pool. Given that they control these keys, they can theoretically give themselves preferential quotes – e.g. trade 1 USDC for 1000 ETH – thus draining the pools.

While I like the idea of public pools and I think that it can seriously improve the liquidity of the protocol, I believe something more advanced, that includes some sort of collateral is needed. One example could be TrueFi.

At the end of the day, however, LPs are running counterparty risk. The team has done a ton of DD and taken all legal steps required to safeguard users, but this is not enforced on-chain.

1 Like

The comment period for this thread is now closed - thanks for all the comments!